Grupo Santander: Technology and Operations in a Global Bank

2010 had been marked by significant economic stagnation, social reform resistance, the
Greek dept crisis and the 2010 World Cup in South Africa. In July, right after Spain had
become the World Champion in football defeating Holland, the Bank of Santander
announced the acquisition of the German SEB, a Scandinavian bank accounting for a
total of 173 retail branches. It seemed that neither the financial crisis, nor the recession
or the dept would hold back Santander’s global expansion.
The bank was soon to be awarded as one of the Most Efficient Banks in the World, due
to their efforts to optimize the technological and operational models within the
corporation to unprecedented extent.

History of Grupo Santander

The Santander group started in 1857 as a local bank. Yet, its strategic position in the
city of Santander soon made it a key player in the trade between the north of Spain and
Latin America. The bank grew in importance and financial resources and in the
beginning of the XX century it acquired the major Spanish Banks Banco
Hispanoamericano (1900), Español de Crédito (1902) and Central (1919). The
expansion continued with new strength in the late 40s until the 60s when Santander
acquired its main rival Banco Mercantil de Santander (1946) and started its strong
international expansion. First, it established a branch in Cuba (1947). Then it entered
México, Argentina and Venezuela and by 1956, the bank’s Latin American Department
was set up. In the following years, offices were opened in London, New York, Paris and
Frankfurt. In 1965 Santander established the Banco Intercontinental Español, today -
Bankinter.

The gradual expansion of the business continued with offices in Puerto Rico, Chile,
Portugal and Germany. In 1989, the “Supercuenta Santander” was launched. This was
one of the most innovative financial products at that time in the Spanish banking
system. This famous innovation was a focal point not only in the history of the
Santander Group itself, but also for the whole banking system in Spain. It destroyed the
“status quo” and opened up the Spanish financial system to competition. It initiated a
fierce race between rival banks which was one of the key reasons for Santander to
become one of the proven leaders internationally.

In 1994, Santander bought Banco Español de Credito (Banesto), which ultimately

reaffirmed the bank’s position as the leading player on the Spanish market. Five years
later, the corporation merged with BCH – the first major bank merger under the Euro
and became the largest finance house in Spain and the leader in Latin America.
Expansion continued in Portugal, where the group bought the financial group Totta y
Açores and Crédito Predial Portugués.

The Group incorporated Banespa in Brazil, Grupo Serfín in Mexico and Banco Santiago
in Chile in 2000, making it the leading financial franchise in Latin America.

In 2003, the Group set up Santander Consumer merging with the German company CC-
Bank, the Italian Finconsumo, the Hispamer in Spain and other Group companies. This
new consumer banking franchise is currently present in 12 European countries (Spain,
the UK, Portugal, Italy, Germany, the Netherlands, Poland, the Czech Republic,

1
Austria, Hungary, Norway and Sweden), the US (through Drive Finance), and is soon
going to start up its first operation in Chile.

In April 2004, the bank moved its Central Services from Santander to Madrid in what
has become known as the Santander City, where 6,800 people work today. Another
major event of 2004 was the takeover of Abbey, the sixth largest bank in the United
Kingdom. The following year, Santander signed a contract with the Sovereign Bancorp,
the 18th biggest bank in the USA, for 20% stake in the corporation.

Santander broke another record in 2006, when it became the company with the largest
profits (almost €7,6 Billion), more then any Spanish company, spurring heavy
investment in retail banking and quality of service. “We want to be your bank” in Spain
and other enterprising action in Portugal, at Abbey and in America are examples of this
drive.

In 2007, Santander celebrated its 150th Anniversary as the twelfth largest bank in the
world by stock market capitalization, seventh by profits and the bank with the largest
retail distribution network in the western world: 10,852 branches. Santander formed a
consortium with the Royal Bank of Scotland and Fortis to launch a take-over bid for
ABN Amro, through which the bank acquired Banco Real in Brazil, doubling its
presence in the Latin American country.

The next year, Santander continued to grow, making important acquisitions in another
strategic market - the UK. Through the incorporation of Alliance & Leicester and
Bradford & Bingley, Santander expanded its high street network to 1,300 branches and
became the third largest bank in the UK by deposits. Reaching profits of € 8,876
Million, Santander became the third largest bank in the world. (See exhibit 1).

In 2009, Santander entered the US retail banking market with the acquisition of
Sovereign, which has 722 branches in the north east of America.

Today, Santander has a well-balanced geographic diversification spanning throughout

both developed and developing markets. It focuses its presence in nine leading
locations: Spain, Portugal, Germany, United Kingdom, Brazil, México, Chile,
Argentina and the United States, where it has a sustainable market share in the
commercial banking sector.

The Santander Group presently accounts for more than 90 millions customers, 13.660
branches and over 169.000 employees.

In 2009, it reported a net income of € 8.943 Million, market capitalization of € 95.043

Million and asset management above € 1.100 Billion (December 2009)1 . (See exhibit 2,
for Banco Santander’s financial statements).

1 Grupo Santander. Mileshones in Santander’s History. Online. Available. 20th October 2010.

2
As can be seen in Figure 1, in 2010, the Santander Group is a global bank organized in
three main units:

• Primary segments of the business.

• Global businesses.
• Support.

Taking a closer look (Figure 2), it becomes evident that the primary segments of the
business are in essence the different banks organized in six distinct divisions. Further,
the group has identified five different global areas:
• credit cards,
• private baking
• insurance and direct banking
• asset management
• global wholesale banking

All these businesses are united under one bank and they are supported by a strong set of
centralized corporate functions.

Figure 1
Organization of the Santander Group

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Figure 2
Integrating banks and business over the World under the same Santander’s brand

The Department of Technology and Operations is key to understanding the ability of the
corporation to reach high level of functional efficiency and to achieve the set goals and
objectives. Technology and Operations (IT&OPS) integrates all the group’s operations
in a model, designed to help in the unification of the diverse systems by using the same
underlying technological platform while accomplishing maximized efficiency.

Technology and Operations Corporate Function

Technology is the foundation for improved operational and commercial efficiency. The
Santander Group has differentiated itself from its competitors through the design and
implementation of a unique technological platform and a successful operational and
organizational model.

The current operational model of the Banco Santander Group has been developed
through the acquisition of Banesto, taking advantage of the technological platform that
Banesto had already put in place prior to the acquisition. Figure 3 illustrates the
different layers of the technological platform that the Group currently uses.
The basis (referred to as Partenon in Banesto, Exhibit 3) is a “common” transactional
system which is flexible, modular and expandable. Not only does this unified platform
allow for rationalizing the Operations module but also it creates cross-selling
opportunities, improves customers’ satisfaction and operational performance. The
platform uses a single database so all of a customer's relationships with the bank are
automatically linked through a single view of customers. It is a structural competitive
advantage for Santander, since it is a more advanced system than other banks’.

Temporarily Partenon coexists with Altair, the transactional system of the Latin
American Banks, yet convergence between the two systems is planned for the near
future.

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Over the transactional system there is a “middleware” layer which serves as the baseline
for the multi channel services, such as integrating ATMs, Internet banking, offices, etc.
Finally there is a user’s layer, called Alhambra, which executes functions typical for a
CMS platform, customer service, information integration, etc. The Group is determined
to unify all the existing IT systems in one unique technological platform in order to
provide high efficiency throughout all levels of services.

Figure 3

This technological base supports what is known as the Santander’s Technology,

Operations & Cost Model consisting of four building blocks:

1- Strong cost management discipline with low operational risk

2- Integrated management of efficiency
3- IT&OP group model
4- Global factories

The Santander Group is determined to be recognized as the most efficient bank in the
world. In order to achieve this goal, it has put forward a strategy aiming to reduce costs,
by implementing a strong cost discipline, and increase efficiency through unification
and standardization of both processes and technology. The implemented efficiency
model emphasizes on the importance of three clearly defined dimensions - decrease in
costs, control of operational risks, and continuous improvement in the quality of service.

These three dimensions further encompass all three levels of the technological support
system - Technological, Operational and Organizational (Figure 4) making the system
not only a technological advance but also an irreplaceable part of the entire business
model. Thus, it entails a coordinated work between the different systems and its impact
over the three dimensions of efficiency, known as the integrated management of
efficiency.

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Figure 4
The model implies joint discussions about systems and efficiency

This relation makes the integration between the different systems and the core business
activities it serves mandatory. Successfully implementing this unification implies that
the integrated management systems pressures the businesses to decrease cost and
increase efficiencies while the business provides demands that guide the work on the
manufacturing side of the group.

Figure 5 shows how this works in practice in a global model of IT&OP. The model
integrates the system’s plan with measures to improve costs, considering necessary
restrictions in quality and risk, while interacting with the different business areas.

Figure 5
The integration results in a balanced management model

Due to its common technological platform the Bank of Santander can also benefit from
the economies of scale principle as it is capable to transfer key technological aspects,
information systems and processes to unified and centralized units, focusing on
different parts of the core business of the institution.

The relationship between the operational system and the Bank is demonstrated in
Figures 6 and 7. Each business unit (a bank, for example) has a Manufacturing
Manager, responsible for the technology and operations of the unit while also being a
member of the executive team in charge of the management of the business. The
Manufacturing Manager’s main objective would, thus, be to maximize the value of the
bank while introducing an adequate optimization of costs, improvements in quality, and
adequate control of operational risk.

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Figure 6: The Manufacturing Manager’s Function

Moreover, the work at the individual unit has been further consolidated with that of the
corporation as most of the technology and operations is subcontracted to the centralized
units (factories) of the group. This unification and centralization leads to a substantial
improvement of efficiency due to the effective and successful coordination of the
relations between the two entities.

Through this model of technology and operations (Figure 7) all the business units
(majority banks) use these centralized factories with unified policies established at
corporate level in the Group, guaranteeing the maximum level of efficiency. This allows
the banks to remain in control of their processes, operations and technology while they
can depend on the highly specialized functionality of the centralized units. In essence
the bank outsources the execution of these services on a technological level, while, due
to the interconnectedness of the central and local units, the process remains within its
premises; i.e. once the local unit needs something done it would send its request to the
manufacturing manager who would assume responsibility and thus, the execution of this
request would stay within the bank, yet through an extensive and unified system of rules
and regulations the manufacturing manager would outsource the same task to the most
appropriate centralized unit which would in turn make use both of its bank know-how
and its extensively specialized services to produce the best result.

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Figure 7: Outsourcing unit functions to centralized factories

The efficiency ratio, used as a principle ratio to measure efficiency of operations, is the
cost to income ratio. It measures how much each unit of income costs in operations, i.e.
the smaller the ratio the better the efficiency within the unit. This, however, is not the
only measurement that the Group to reflect on the corporate development uses as the
improvements should be done by increasing the quality without deteriorating the
banking risk. This balance is key to the future development of the bank.

Exhibit 4 Graph 1 compares the efficiency ratio of the Santander Group against other
global banks during 2009. With 41.7 % Grupo Santander was the third most efficient
bank with an efficiency level 21, 8 points below the average in the industry. Exhibit 4
Graph 2 shows Santander’s evolution of this index since 1998. It is important to note
the Group’s outstanding skills to overcome the negative impact on the efficiency ratio
induced by the acquisition of less efficient banks (the ratio during 2009 was 41, 7% but
would have been 39, 5% if it were not considered the recent acquisitions). In spite of
this substantial improvement, the Santander Group continues heavy efforts and
investment to further increase efficiency.

The main goal is that the bank has a manufacturing manager in each unit
(bank/business) it owns. The manufacturing managers are at a key position as they are
the final responsible for all technology and operations processes of the unit, as they are
members of the management committee in the corresponding unit and as such they are
always measured by results. On the other hand, they are also part of the manufacturing
team of the whole group. This duality of functions is key for the model to work and to
integrate the business and the operation concerns. Through it each unit develops a very
sophisticated contractual relationship with each one of the centralized factories. These
contracts specify service level, risk ratios, prices, etc. The group has also implemented a
very extensive governance structure where these contracts, actual performance, and any
possible incidents are followed closely at different structural levels. The manufacturing
manager is also responsible to record everything in a diary on a monthly basis and has
direct access to the factory managers, corporate officers and the corporate director of the
technology and operations if necessary.

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To achieve these spectacular results, the group gradually implemented the Operations
model, applying the following steps:

• Designation of an IT&OP Manager in each bank/country and implementing a

reporting structure for the employees
• Incorporation of the IT&OP Manager in the bank’s Steering Committee
• Implementation of the Corporate Management Model
• Launch of the centralized factories
• Implementation of Corporate Core Applications
• Definition, implementation and communication of every area’s corporate
policies

The centralized factories

Isban, Produban and Geoban, three specialized and centralized factories working mainly
in the areas of software banking engineering, infrastructure, and process outsourcing,
have already taken up the model of specialization and best practices. The factories
model allows solving the classic dilemma between outsourcing and in-sourcing like
this:
• The centralized factories provide value to the units at a local level
• The factories allow to simplify the governance
• Synergies are obtained through economies of scale
• Factories allow to share best practices through the group

The individual factory’s strategy is built as an integrated part of a wider common

strategy. We can simplify these characteristics like this:

• Natural presence in emerging markets, taking advantage of the established

branches of the Group
• Resource optimization in different countries.
• Achieving arbitrage through factories, for example, off shoring from UK to
Spain, followed by from Spain to Latin America. This can be observed in many
cases and it leads to considerable cost saving for the company.

There are a number of contracts signed by Geoban, Isban and Produban regarding the
provision of services. The three organizations act as external suppliers to the Bank of
Santander Group, working with auditable market parameters as well as prices defined
by the market. The contracts include clauses on the following:
• Levels of services, being evaluated by a number of homogeneous indicators in
all the factories, which are evaluated by the committees.
• The relationship between the unit and the factories

Isban

Isban (Software banking engineering) forms part of the Technology and Operations
division of the Santander Group.2 It is the factory responsible for the software
development within the Group. The mission of the entity is to do so with high efficiency
2
Isban. Isban. Online. Available. 21.10.2010.

9
and quality. Its strategy is based on a simple concept: becoming the ally of the financial
institutions of the Santander Group through the use of Technology, with the aim of
providing their customers with better service, while reducing operating costs. The
Santander Group’s technology platform, and support from the Technology and
Operations areas, allows for global customer management, quicker time-to-market,
integrated channel management, consistency and quality in management information
and minimal operational costs.

Operational Model

The production of the Isban factory is centralized in labs in Spain. They are in charge of
assuring the best quality and the maximum efficiency. The process of integration is
performed by the respective integrating units in each country. When the Alhambra
project was being implemented, the Group formed a specialized multidisciplinary team
to ensure the successful execution of the project. There are around 3500 employees in
Isban and the number rises to about 9000 including the subcontracted companies and
specialists internationally. The factory has strategic physical presence in the countries
where the Bank also has offices, Spain, UK, Germany, Portugal, Italy, United States,
Brazil, México, Chile and Argentina. In the cases of Colombia, Puerto Rico and
Uruguay its activities are handled through the other points in Latin America, which
have a bigger critical mass. (See Exhibit 5).

In order to secure the success, ISBAN has developed very strict methodologies at all
levels of its processes, maintaining demanding quality standards. The methodologies
and the indicators utilized are the standardized in all the countries allowing for easier
interaction with the entity and efficient integration processes. While responsibility is
local, the implementation is global. The follow up of all projects is done both at
corporate and local level to ensures a better control of all the system.

ISBAN externalizes some of its projects to subcontractors. The process for the
standardization and approval of local and global suppliers is very rigorous. There are
three main ways that this collaboration could be structured:

 Order a turnkey product – this only happens in very particular cases as the main
goal of the entity is to not lose the control of the key links in the chain.
 Technical assistance – this is the most common way of collaboration since it
basically clusters the specialists in the teams managed by ISBAN
internationally.
 Software factories – this approach is exclusively used by the labs, which manage
very specific activities (such us software testing). ISBAN utilizes multiple
suppliers for the same task to avoid excessive dependence. Additionally, as a
group, they have high amount of power of negotiation.

To summarize, Isban’s main characteristics are:

 It is a key part of the technology and operations model of Grupo Santander

 It develops proprietary software for the corporation
 It requires considerable investment in methodology and middleware
 It works for all the Business units of the group
 It thinks globally, but act locally, seeking to exploit differences

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An important indicator in ISBAN is the number of incidents and resolutions. The stock
of incidents in Europe decreased 65% and 52% in 2008 and 2009 respectively. During
2010, the expected decrease is forecasted to be of another 50%. Likewise, the influx of
incidents decreased during the same years was 20% and 40% respectively and in 2010 it
suppose to decrease by another 40%.

Produban

Produban was created in 2005 to be in charge of the Group’s infrastructure. The main
focus of its activities is in Brazil, Mexico, Spain and UK. It has 2000 full time
employees and almost 2000 subcontracted. In only 3 years, Produban had implemented
its infrastructure management model in all financial entities on the Group (62 in 19
countries).

As can be seen in Figure 8, Produban has five centers: the Latin American and US
operations are processed in Mexico (Querétaro); the continental EU countries and Chile
are processed in Spain (Madrid); UK is processed locally; and Brazil is at this point an
experimental project. As Spain has a good balance between operational risk and
acceptable level of costs, there are service centers of monitoring located in Cantabria
(Spain).

Produban complements these centers with other external locations. For example, it has a
processing center in Portugal, and is testing some operations with TCS in its offices in
India and México.

Figure 8

Produban has a global network that links the banks (and all its respective nets) and the
processing centers. Referring to cases of disaster recovery (DR), the group uses data
processing in other regions (separated by more than 400 km). For example, the DR of
Chile and Mexico is located in Madrid. For the case of Argentina, however, it is still
outsourced by IBM.

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Produban also provides services to Isban with a specialized subgroup.

Produban is key at times of acquisitions. For example, when a bank is acquired, the first
thing done is to move its infrastructure. In most acquisitions there are synergies of
around 30%, achieved just with this integration.

Exhibit 6 shows some of the operational parameters performed by Produban. As can be

seen, the capacity has increased drastically while expenses had been kept under control
resulting in a significant increase of the return of investment – while expenses had
increased 1.33 times, productivity has been doubled.

Geoban

Since its creation in 2003, Geoban has positioned itself as one of the most important
providers in the Business Process Outsourcing market in the financial sector. It has 6
offshore factories with 1200 full time employees and 1100 employees subcontracted
providers.
Ever since their establishment, the Geoban factories have demonstrated exceptional
growth and consolidation managing all the operative activities - Accounts,
Transactional, Cards, Values, Asset Management, Treasury, Renting, Insurances,
Financing and consumption.

Apart from these three major centralized factories, there are other Operations units
established at country level, as near-shore units. They provide system administration
and operations management services for all the banks & business units in proximity and
have a total of 4000 full time employees. These units are Santander Operations Retail
(SOR) in Spain, Geoban UK, Geoban Germany and Geoban USA.

Operational Model:

The operational model is based on three main layers:

1- A corporate model of operations, in which the Corporate Operations

Area defines both the operational and control models applicable to the
banks that it serves.

2- A layer at a country level defined as the ‘bank layer’ or ‘system

administration & operations management layer’. It carries the control
and the know-how of the processes. In some cases, it is also in charge of
managing particular operational processes with other local suppliers.

3- The Operations Factories which are specialized in providing a particular

service based on their know-how, expertise and capabilities (For
example, in Poland a factory was created for the handling of credit cards
which provides services to the whole Europe). These factories, however,
do not interact directly with the business units. Rather, they
communicate to the middle layer. (a.k.a ‘bank layer’)

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In order for a specific functionality to be assigned to a branch of Geoban in a specific
country, the candidates need to pass an extensive evaluation processes to determine
their level of preparation to assume specific tasks. Once this evaluation is done, there is
a further detailed study which aims to determine the specific cultural peculiarities and
law regulations which might make one location better then another, especially when
there are particular language requirements and legislation. For example, Geoban Poland
is specialized in serving the German units, as the employees are required to have a high
level of English and German and furthermore, the are a part of the EU and thus, are very
aware of the legislative regulations that they are required to follow (such as the Personal
Data Protection Law, for example).

On the other hand, while the Partenon technological platform is not implemented
universally, Geoban in México provides services to the countries that use the Altair
platform. Querétaro handles Chile, Argentina, Colombia, México and USA. Currently,
the Santander Group is investing heavily into building a new factory in Argentina,
which would take over the services in Argentina, Uruguay and Spain.

The objective of Geoban is to reduce the cost of operations, contributing to the overall
improvement in the costs of the group. Costs have been reduced approximately 20-25%
in the Polish factory alone (compared to the Spanish one). This allows the corporation
to cover the start up costs and to be able to invest and improve the processes’ cost.
(Exhibit 7).

Ability to Invest
Geoban is adding value, through a near and off shoring factory network that executes
the group’s back office.
The savings that the conglomerate has managed to achieve through increasing the
efficiency of the overall of the Technology and Operation systems in the bank have lead
to its ability to further invest in Research and Development to secure continuous
improvement of its services and processes.
Due to the cost cuts that the Santander Group was able to achieve by implementing this
innovative “outsourcing inhouse” approach it was able to distribute the financial and
human resources to other areas of their activities. Thus, in 2010, the Santander Group
has been pronounced the leader in R&D in Spain (Exhibit 8), investing close to a €100
Million more then its main rival Telefonica.
Further, it is the European Bank with the highest investment in R&D with over €200
Million ahead of RBS (Exhibit 9). Its success in optimization, the saved and reinvested
resources along with overall conviction in the importance of innovation at all levels,
have currently put Banco Santander on the 31st place in Europe for R&D investment
(Exhibit 10).

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Exhibit 1

Milestones in Santander’s History

One of Santander’s key strengths is its powerful presence in the countries where it
operates

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Exhibit 2

Key consolidated data

Variation
2009 2008 Amount % 2007 2007
Balance sheet (million euros)
Total assets 1.110.529 1.049.632 60.898 5,8 912.915
Net customer loans 682.551 626.888 55.662 8,9 571.099
Customer funds under management 900.057 826.567 73.489 8,9 784.872
Shareholders' equity 70.006 63.768 6.239 9,8 51.945
Total managed funds 1.245.420 1.168.355 77.065 6,6 1.063.892

Income statement (million euros)

Net interest income 26.299 20.945 5.353 25,6 14.443
Gross income 39.381 33.489 5.892 17,6 26.441
Net operating income 22.960 18.540 4.420 23,8 14.417
Profit from continuing operations 9.427 9.030 397 4,4 8.327
Attributable profit to the Group 8.943 8.876 66 0,7 8.111 9.060

EPS, profitability and efficiency (%)

EPS (euro) (1) 1,0454 1,2207 (0,1753) (14,4) 1,1924 1,3320
Diluted EPS (euro) (1) 1,0382 1,2133 (0,1751) (14,4) 1,1809 1,3191
ROE 13,90 17,07 19,61 21,91
ROA 0,86 0,96 0,98 1,09
RoRWA 1,74 1,86 1,76 1,95
Efficiency ratio (with amortisations) 41,7 44,6 45,5

BIS II ratios and NPL ratios (%)

Core capital (2) 8,6 7,5 6,3
Tier I (2) 10,1 9,1 7,7
BIS ratio (2) 14,2 13,3 12,7
NPL ratio 3,24 2,04 0,95
NPL coverage 75,33 90,64 150,55

Market capitalisation and shares

Shares outstanding (millions at period-end) 8.229 7.994 235 2,9 6.254
Share price (euros) 11,550 6,750 4,800 71,1 13,790
Market capitalisation (million euros) 95.043 53.960 41.083 76,1 92.501
Book value (euro) (1) 8,04 7,58 7,23
Price / Book value (X) (1) 1,44 0,89 1,91
P/E ratio (X) 11,05 5,53 11,56

Other data
Number of shareholders 3.062.633 3.034.816 27.817 0,9 2.278.321
Number of employees 169.460 170.961 (1.501) (0,9) 131.819
Continental Europe 49.870 48.467 1.403 2,9 47.838
o/w: Spain 33.262 34.492 (1.230) (3,6) 34.821
United Kingdom 22.949 24.379 (1.430) (5,9) 16.827
Latin America 85.974 96.405 (10.431) (10,8) 65.628
Sovereign 8.847 — 8.847 — —
Corporate Activities 1.820 1.710 110 6,4 1.526
Number of branches 13.660 13.390 270 2,0 11.178
Continental Europe 5.871 5.998 (127) (2,1) 5.976

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Exhibit 2 (Continued)

o/w: Spain 4.865 5.022 (157) (3,1) 5.014

United Kingdom 1.322 1.303 19 1,5 704
Latin America 5.745 6.089 (344) (5,6) 4.498
Sovereign 722 — 722 — —
(*).- Including extraordinary capital gains and allowances
(1).- Data 2008 and 2007 adjusted to the capital increase with preemptive rights at the end of 2008.
(2).- Data 2007, BIS I criteria.
Note: The financial information in this report has not been audited, but it was approved by the Board
of Directors at its meeting on January 25, 2010, following a favourable report from the Audit and
Compliance Committee on January 20, 2010. The Committee verified that the information for the
quarter was based on the same principles and practices as those used to draw up the annual
financial statements.

Exhibit 3

Partenón architecture provides the retail segment of the Santander Group in the USA
and Europe with a platform to address product and banking service functionality.
It is customer oriented and it consolidates the existing databases throughout the units to
ensure that there is only one data entry point and that all the necessary information is
readily available so that the clients would be best served.
Partenón architecture ensures balancing at the accounting level and consistency with the
information provided to the management systems. The entire organization shares a
unified vision of the progress of the business. It provides an integrated vision of the
clients and their positions in all of the channels. As such, the provided services are
business process oriented in scope (multichannel, multilanguage, multicountry,
multientity, communications to clients, etc.).
Partenón provides a single product catalogue that allows easy configuration of new
products thus reducing time to market.

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Exhibit 4: In 2009 Santander ranked 3rd in level of efficiency among its competitors

1998 – 2010 Continuous improvement/decrease in their efficiency ratio

17
Exhibit 5: ISBAN is the global centralized factory specialized in the development
and implementation of the Santander Group software strategy, providing services
to the entire group since 2002

18
Exhibit 6: PRODUBAN operates the technical platform and provides services to
all the Group’s entities

MIPS Spending M EUR

1,441
x1,3 1,331
110,366
3
1,193 95,992

1,084 1,084
81,896

74,496

57,400

x2

2006 2007 2008 2009 2010

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Exhibit 7: Geoban is adding value, through a near and off shoring factory network
that executes the group’s back office.

35,2

17,3

6,5
1,9 3,5

2005 2006 2007 2008 2009

Exhibit 8: Research and Development Investment by Spanish Companies (millions

Euros) in 2009

Exhibit 9: Investment in Research and Development in European Banks (Millions

Euros) in 2009
1
856

629

532

325
297
251
221 211
142 128 128
90 85 76 71
le
s

g
lo
k

k
k

ia
k
r

nk

C
ay

in
de

di

an
ra

an

an
ao
B

ex
SB

B
Ba

ba

re

k
cl

e
R
n

K
zb
p

an
D
en
ar
ta

C
an
o

e
ke

a
er
ni

B
n

ab

ch
G
B

de
S

m
s
Sa

ds
te

ts
an

or
a

om
ie

es

oy
eu
D

N
c

C
t

Ll
So

In

20
Exhibit 10: Investment in Research and Development in European companies (in
millions Euros) in 2009

21
1º

References:
Grupo Santander. Milestones in Santander’s History. Online. Available. 20th October 2010.
<http://www.santander.com/csgs/Satellite?
accesibilidad=3&canal=CAccionistas&cid=1146205899430&empr=SANCorporativo&leng=en_GB&pag
ename=SANCorporativo/Page/SC_ContenedorGeneral>.

Isban. Isban. Online. Available. 21.10.2010.

<http://www.isban.es/eng/eng_isban.html>.

22